French Assets Under Pressure Amid Political Instability

French stocks hit a three-month low as political instability impacts government budget efforts. Concerns over U.S. tariffs keep European automobile stocks pressured. France's main stock index and bonds decline, with the technology sector weighing heavily on the STOXX 600. Rate-sensitive real estate stocks slightly cushion broader market losses.

French stocks reached their lowest point in over three months on Wednesday as investor confidence wavered due to the government's struggle to pass its budget. Simultaneously, ongoing fears over potential U.S. tariffs kept European automobile stocks under pressure, with the pan-European STOXX 600 closing 0.2% lower.

This slide in French equities saw the main stock index drop over 1% during the trading session to its lowest since August, eventually closing 0.7% down. The technology sector was a significant detractor, with French companies leading the losses on the STOXX 600.

Additionally, French bonds suffered, elevating the government's long-term borrowing costs to peaks not seen since 2012. The market sentiment was further dampened by concerns of possible government collapse following calls from far-right leader Marine Le Pen, threatening stability with planned budget cuts and tax hikes.

(With inputs from agencies.)